Do We Need a Retirement Score?

What if we approached retirement readiness the same way we assess credit worthiness? That would most likely mean many of us would get a failing score, says Certified Public Accountant Roger Roemmich.

Studies show that many Americans lack retirement security and struggle to know when to leave the workforce and start drawing on their investments, making it hard to know when to enter retirement. But Roemmich claims people are using the “wrong variables” to measure their retirement readiness.

To help demystify some of the confusion, he developed the “CAMP SCORE” that measures reitrement readiness based on cash flow, aging, medical coverage and purchasing power.

Over the next 18 years, Americans will turn 65 at a rate of 8,000 people per day, according to the AARP. Yet, many of these boomers aren’t in the right mindset to be truly retirement ready, Roemmich says.

“A lot of the financial products out there today have put the emphasis on how high you pile your assets,” he says, “as opposed to cash flow.” He adds using assets as a measuring stick isn’t accurate as their return changes dramatically. He says retirees need to think of cash flow. “They can see where money is coming in from each month.”

Here’s a breakdown of Roemmich’s CAMP SCORE method to help boomers measure the effectiveness of their own planning: